Over the past few years people have tended to confuse the concepts of comprehensive financial planning with investing. Yes, developing a sound financial plan involves making decisions about saving and investing. The simple truth is that investment decisions must be closely tied to many other elements when developing a financial plan.

Let's face it. Recent stock market volatility has left people bewildered, weary and in some cases doubtful about their past financial decisions. The tech sector down turn, the tragedy of September 11, 2001 and the recent corporate fraud scandals have indeed left investors frustrated. Once confident investors are now questioning whether they should place their money under the mattress.

Seasoned investors are aware that there are periods of bull markets, rising prices, and bear markets, declining prices. We have been in a bear market since March 2000. Yes, we have seen pockets of recovery, but we have not yet exceeded the levels achieved since then. The key to weathering these ups and downs lies in a sound investment policy. This involves analysing your time horizon, personal objectives and financial situation, and then matching these closely with your investment decisions.

Uncertainty and risk are always present. Risk can be tempered by holding a balanced portfolio of stock and bond funds for long-term goals. Money put aside for emergencies or short-term needs should be kept in bank accounts or money market funds.

One never knows when it will be safe to buy stocks, or simply, ?et into the markets.? What we do know is that the price of being out of the market can be very high indeed. History has proven over and over, the best days to own stocks occur following periods of poor performance.

You cannot avoid the challenges one encounters as a long-term investor, but by using diversification and balance you certainly smooth the ride so that you can stay the course toward meeting your financial objectives. It's not easy to put all this together on your own. Consult with a financial planner to produce a plan, then stick with it.

This is a monthly article on financial planning. Call or write to Rick Sutherland CLU, CFP, FDS, R.F.P., of Fundex Investments with your topics of interest at 798-2421 or E-mail at rick@invested-interest.ca.